The Hartford Closes Allianz Repurchase Transaction
April 18, 2012 by Shannon Lapierre
Company completes repurchase of debentures and common stock warrants for $2.425 billion
HARTFORD, Conn.–(BUSINESS WIRE)– The Hartford announced today the closing of the repurchase from Allianz SE (together with certain of its affiliates, “Allianz”), for aggregate consideration of approximately $2.425 billion, all outstanding 10% fixed-to-floating rate junior subordinated debentures due 2068, with an aggregate principal amount of $1.75 billion (the “Allianz debentures”), and all outstanding warrants entitling Allianz to purchase 69,351,806 shares of the company’s common stock (the “Allianz Warrants”). The company and Allianz agreed to the terms of the transaction in a purchase agreement dated March 30, 2012.
“While Allianz remains a valued shareholder, the transactions closing today to repurchase the debentures and warrants represent another important step forward for The Hartford,” said The Hartford’s Chairman, President and CEO Liam E. McGee. “We continue to take decisive strategic and financial actions to position the company for profitable growth and to improve financial flexibility. These actions, along with our sharper strategic focus, demonstrate important steps in our plan to deliver superior, long-term returns for shareholders.”
The warrants were repurchased as part of The Hartford’s existing $500 million equity repurchase program. The company intends to complete, on a timely basis, the remaining authorization of approximately $106 million.Michael Diekmann, Chief Executive Officer of Allianz, said, “We have earned good returns on these investments in The Hartford and we are pleased to close these transactions. As a continuing shareholder of The Hartford, we are very supportive of the actions the management team is taking to position the company for long-term success and deliver greater value to shareholders.”
Based on the difference between the 10% coupon rate on the repurchased Allianz Debentures and the weighted average effective interest rate on the recently-issued Senior Notes and Junior Subordinated Debentures, the company estimates annual pretax interest paid will be reduced by approximately $45 million, while the total par value of debt outstanding will increase by $400 million.
About The Hartford
The Hartford Financial Services Group Inc. (NYSE: HIG) is a leading provider of insurance and wealth management services for millions of consumers and businesses worldwide. The Hartford is consistently recognized for its superior service, its sustainability efforts and as one of the world’s most ethical companies. More information on the company and its financial performance is available at www.thehartford.com.
Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2011 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.
The Hartford
Media Contacts:Shannon Lapierre, 860-547-5624
shannon.lapierre@thehartford.com
orDave Snowden, 860-547-3397
david.snowden@thehartford.com
or
Investor Contacts:Sabra Purtill, 860-547-8691
sabra.purtill@thehartford.com
orRyan Greenier, 860-547-8844
ryan.greenier@thehartford.com
Source: TheHartford
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